THE FIRST CULTURE

Chapter 3
CUSTOMER FOCUS: COSTS AND BENEFITS
1. Customer care emphasizes the importance of an organization’s attitude to, and covers
every aspect of its relationships with, its customers. It aims to close the gap between
customers’ expectations and their experience.

2. Quality has been evaluated into a philosophy that guides every activity within a business.
This is known as total quality management (TQM).

3. A customer is the purchaser but they may be an industrial purchaser buying for a
company or an individual buying from themselves.
4. Customer focus represents a major shift in marketing emphasis for many organizations
which at one time did not seem to realize that they had customers at all.

5. Marketing myopia refers to the phenomenon whereby sellers confuse wants and needs.

6. A Marketer obsessed with his own product may introduce new benefits and
improvements that the consumer simply does not want and is not willing to pay for.

7. Customer loyalty is promoted, achieved and enhanced in several differing ways.

(a) The launch of specific initiative aimed at engaging the customer in schemes which
help to guarantee loyalty.
(b) Creating a customer proposition offering something which customers may feel they
cannot refuse.
(c) Engaging the customer in a dialogue, thus ensuring that the customer feels an
affinity with the product or service on offer.

8. Customer retention is important because the cost of acquiring new business can be
significant.
 Advertising
 Salesmen time
 Credit checks
 Agent commission
 Initial discount

9. Customer value = perceived benefits - perceived sacrifice.

Jobber, 2007

10. The customer’s perceived benefits fall into four categories.

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(a) Product benefits

(b) Service benefits
(c) Image benefits
(d) Relational benefits

11. The customer’s perceived costs also fall into four categories.
(a) Monetary
(b) Time
(c) Energy costs are self-explanatory
(d) Psychological costs arise from the purchaser’s perception of risk associated with the
buying decision.

12. Relationship marketing is the process of creating, building up and managing long-term
relationships with customers, distributors and suppliers.

13. The type of relationship between a buyer and a seller may be of two types.
(a) In a Transaction, a supplier gives the customer a good or service in exchange for
money.
(b) In a relationship approach a sale is not the end of a process but the start of an
organization’s relationship with a customer.

14. Loyal customers are profitable because:

 They do not have to be acquired
 They buy a broader range of products
 They cost less to services as they are familiar with the company’s ways of doing
business.
 They become less sensitive to price over time
 They can recommend by word of mouth
15. The justification for relationship marketing comes from this need to retain customers.
There are five different levels of customer relationship.
a. Basic
b. Reactive
c. Accountable
d. Proactive e. Partnership

16. A relationship marketing approach is more appropriate where switching costs are high
and a lost customer is thus probably lost for a long time.

17. Relationship marketing is grounded in the idea of establishing a learning relationship

with customers.

18. The purpose of relationship marketing is to establish, maintain and enhance

relationships with customers and other parties so that the objectives of both parties involved
are met.

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(a) Service and industrial companies have direct, regular and often multiple contacts
with their customers.
(b) Trust and keeping promises.
(c) Networks of exchange partners.
19. Loyalty cards are designed to reward customers for repeat purchase. They:
 Collect information about customer purchasing habits
 Reward customers for repeat purchase, to encourage sales volumes.

20. These are the distinguishing characteristics of relationship marketing.

(a) Customer retention
(b) on-going relationship
(c) Long time scale
(d) Regular customer contact
(e) Multiple employee/customer contacts
(f) Quality and customer satisfaction
(g) Key account relationship management
(h) Trust
(i) Multiple exchange

21. Quality means the degree of excellence of a thing- how well made it is, or how well
performed if it is a service, how well it services its purpose, and how it measures up against
its rivals.

22. Two approaches to quality control are as follows.

(a) Minimizes costs
(b) Zero rejects and 100% quality

23. Customer care emphasizes the importance of attitude and covers every aspect of the
organization’s relationship with its customers.